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Application Engineering Specialist Takes Home GM Supplier Quality Excellence Award
Image courtesy of Spirol, Inc.
A maker of engineered fasteners is among the 7% of suppliers recognized by auto giant
General Motors has made a big push to improve product quality over the last five years, an effort that's paid dividends with a nearly 50 percent reduction in warranty claims and related cost. Eager to build on this success, GM recently undertook a number of customer-driven "product quality initiatives" that are designed to exceed customer expectations. Besides soliciting early customer input on vehicle design and development, the company is expanding its strategic sourcing efforts to increase collaboration with the best suppliers in the industry on complex components, affecting up to 60 systems across seven vehicle architectures and 20 powertrains.
Last fall, the auto giant announced that it was adding a Supplier Quality Excellence Award to recognize approximately 7 percent of its top product suppliers that have demonstrated the highest levels of quality performance over the previous 12 months. Part of GM's stated commitment to provide the best overall customer experience in the automotive industry, the Supplier Quality Excellence Award will focus on improving collaborations and cooperation with suppliers.
"Suppliers play a vital part in the overall quality of our vehicles, and we view their hard work and dedication as part of the foundation for GM to continue to be a leader in product quality and overall customer satisfaction," said Bob Socia, then vice president, Global Purchasing and Supply Chain, in a statement announcing the establishment of the award. "We have made significant progress in recent years improving product quality, and, moving forward, we will continue to improve supplier relations to achieve a world-class supply chain focused on quality, capacity management, and total cost."
The Supplier Quality Excellence Award is part of a broad and sustained effort by GM to further improve quality and provide the best customer experience possible. In a move that GM said ushered in a "new customer experience and quality era," the company recently combined its Product Quality and Customer Experience organizations under the leadership of Alicia Boler-Davis, vice president of Global Quality and U.S. Customer Experience.
One of the first companies to be selected by GM for the Supplier Quality Excellence Award was Spirol Industries Ltd., the Windsor, Ontario division of Spirol International Corporation, an engineered fastener manufacturer headquartered in Danielson, Connecticut. The Windsor facility was recognized for its sterling quality record between July 1, 2011 and June 30, 2012, during which it produced only a handful of rejected parts among an annual output of "close to 25 to 30 million pieces" produced for GM, according to Michael Kassian, Spirol's automotive sales manager.
Although Spirol (www.spirol.com) manufactures a diverse line of engineered fasteners, including precision shims, coiled and slotted spring pins, alignment dowels, and compression limiters, its calling card is its ability to provide application engineering services by partnering with companies at the design level.
"Let's say [an automaker] is working on a new transmission," said Christie Jones, market development manager at Spirol International. "They partner with us at the design level, and we will actually design the element of their transmission where it's going to join, or be assembled together, with another component. So we provide application engineering. It's complimentary for our customers, but we provide application engineering services that ultimately result in the company buying the component that's used for fastening and joining, or spacing, from us.
"We help them with that design and we don't just say 'This is the recommended part;' we also give them the recommended design guidelines or the design specifications for their assembly. We'll say, 'You have to have a hole size of 6mm, +/-0.05mm.' So we give them the recommendation for the interface between their product and our product."
Although many companies can produce some of the same types of products that Spirol makes, Jones says, there aren't many that can match Spirol's total service offering. "Some people might be able to make shims because they have stamping machines, and some people might be able to make slotted pins because they have roll forming machines," she said. "But there really aren't many, if any, other companies in the fastener industry that are doing the application engineering that we do, and that's really what differentiates us."
Although the automotive industry is Spirol's top market, the company also fields demand from the agriculture/heavy equipment, aerospace, and general industrial markets. Spirol has over 15,000 customers worldwide, ranging from Mom and Pop shops to General Motors, one of the largest companies in the world. Because of their diverse nature, each customer is looking for something different when they engage with Spirol.
"Some companies just want somebody who's going to give a quality product and deliver it on time," said Jones. "But when companies say they really value Spirol outside of the general quality and delivery, which, obviously, are important to any company, it's those companies that are constantly designing new products, where Spirol can help take some of that design work off of their plate. Because again, we're not just recommending the component—you could call it an engineered fastener—that they should use for joining and assembly. We're actually designing a portion of their component with them. By partnering with them at the design level, we help them design their assemblies so that they go together and they stay together for the intended life of the assembly."
Spirol's Michael Kassian took time out from a busy schedule recently to talk with Design-2-Part Magazine about some of the company's efforts that led to their winning the GM Supplier Quality Excellence Award. Following is an edited transcript of our conversation.
D2P: Why did Spirol win the GM Supplier Quality Excellence Award?
Michael Kassian: We're a small fastener supplier, and a lot of other suppliers are grouped in the same size range as us. We supply a ton of parts—25-30 million pieces—but there's no real way that we're going to get the Supplier of the Year award exposure that we would need to be recognized for the larger supplier awards. So GM created this middle market supplier award, and I believe why we received it is, number one, the amount of product we ship. We're close to 25 or 30 million pieces directly from this facility here in Windsor, and against that, maybe we've had 5 part rejects in 12 calendar months. So when you produce the number of parts that we do, and minimal amount of quality rejections, they want to recognize that within their supplier base. I think it was eight awards, in total, that they gave out.
D2P: Spirol's press release announcing its receipt of the 2012 General Motors Supplier Quality Excellence Award mentioned statistics for quality performance in areas like line interruptions, recalls, and corrective actions that supported Spirol's receipt of the award. Can you talk a little bit about GM's quality performance criteria and how stringent they were?
MK: Essentially, GM grades their suppliers on a monthly basis, and there are multiple levels that go into it, including, obviously, ppm levels, the number of defective parts per million that their plants receive. Then they look at a 6-month total for major disruptions. And then they have a section, which is kind of all grouped under quality, with new launches (Launch PRNRs), controlled shipping issues, certifications, and what type of financial risk you present to them, and it's all formatted into a number out of 100. The Windsor facility, for 12 standing months, didn't receive a score under 98. So there are lots of factors that go into it on a monthly basis.
D2P: Are you able to say, in a general way, what types of parts you made that were the basis for this award?
MK: Absolutely. We're an engineered fastener company, and our Windsor facility focuses on roll formed tubular products. So under that umbrella, it could be an alignment dowel; it could be a spacer; it could be a compression limiter. Those are the primary products.
D2P: In the release that GM sent out about this award, Bob Socia, who was then the vice president of GM's global purchasing and supply chain, said that GM had made significant progress in recent years in improving product quality, and that moving forward, GM "would continue to improve supplier relations" to achieve what he called "a world-class supply chain focused on quality, capacity management, and total cost." How does Spirol help GM in creating that type of world class supply chain where they emphasize quality, capacity management, and total cost reduction?
MK: Besides being a production facility for fasteners, we're kind of unique in how we partner with our customers: We're really a 'solutions offered' company, or an 'engineered solutions offered' company. We partner with GM's engineers and their program managers two, three, to five years before a particular design or program makes it to market. With our innovative knowledge of the fasteners that we supply, we can make design recommendations for lower cost fasteners that still meet their applications needs. So we're basically a design partner—even though GM has the end say on how they want their products designed—we really are a design partner for them and their tiers, as products trickle down to their tiers, for using the best fastener solution in all their applications, which help control quality, costs, warranty, and things like that.
D2P: So, in cases where GM doesn't actually design the fastener from the ground up from their own facility, they will work with you in the beginning stages of design, right?
MK: Absolutely, and that's not 100 percent of the time. We offer that service; we partner with them. We have experience—65 plus years of fastener experience, which includes the parts that we already supply them. They're very educated on what they do; they have highly educated engineers. But sometimes, the products that their engineers or product engineers are focusing on are so complex that the small little fastener may not be where they want to—or choose to—spend their time engineering, and they may allow someone like Spirol to partner with them to help alleviate the burden of designing, say, a small tubular product or a pin.
D2P: How does Spirol help GM lower the total cost of their products? It sounds as though partnering with GM early in the design stage would be one of the ways that you would help lower total cost throughout the development. Is that right?
MK: Yes, absolutely. Also, many of our products replace traditional machined or powder metal components, so there's actual piece cost savings as well. So when we partner with them, if they're commonly using machined solid pins, we may be able to move them to a Spirol spring pin. The spring pin not only offers cost savings, but in addition to that, it offers weight savings. It allows the production and manufacturing groups not to have to prepare the hole in the host to the same level of tolerancing that they originally had to do for the solid pin. So there's a lot that goes into it that helps reduce the overall cost, but every one of our products, except a handful of them, really offers an opportunity to look at a design and save costs from a design standpoint.
D2P: One of the other areas that GM's Bob Socia mentioned in that release was GM's focus on capacity management. How can Spirol help GM's efforts in that area?
MK: The only comment I would have on that—again, going back to, say, a machined component: A machined component could have a cycle time of 30 seconds. With a lot of the large OEMs, GM included, they're really starting to focus on what they call global programs. So rather than having 10 different V6 engines…obviously, they're going to have some variations of V6 engine, but they're trying to standardize on three or four globally throughout the world. And when you do that, you have common parts. If you're using parts that have long lead times, obscure materials that aren't available in other places of the world, and you address that very early on in the design from a capacity standpoint (fasteners in particular), you could set up and run 30 or 40 million a year.
Just the ability to support the design at an early stage allows us to design in a fastener that really has no capacity constraints. Our cycle times are significantly lower than the type of product that we would compete against, so where they're looking to add capacity and commonize things amongst multiple programs, when they partner with us or they work with us early in the design stage, we can assure that there's never a capacity issue from a fastener standpoint. And capacity is very seldom an issue from a fastener standpoint. The more, the better, typically.
D2P: Why would you say GM implemented this Supplier Quality Excellence Award? What were they hoping to achieve with this?
MK: I think there was a large 'gray area' of suppliers that really either don't have the spend level or the book of business at a higher level. Let's use a million dollars for example. If you're a million dollar supplier to GM, you're a very, very small supplier, very low on their totem pole. They typically give Supplier of the Year awards to companies that they're spending $10 million, $30 million, $50 million dollars a year with because they get high visibility, right? I believe it was to try to put a program in place to reward the small, yet valuable suppliers that tend to never get any recognition. And it's all part of their push to have better relationships with their suppliers.
D2P: Many companies are now viewing their supply chain as more than just a way to reduce operational costs and promote efficiency. It's now being seen as more of a driver of revenue growth and competitive advantage for the OEM. Do you think this is one of the reasons why GM is really trying to improve collaborations with its suppliers?
MK: I think so. I think the entire industry, from 2008-2009 on, recognized that, when the market crashes, for lack of a better term, the suppliers feel the pressure and the push just as much as the large OEMs, such as a GM or a Ford or Chrysler. So I think that they've assembled some really good teams, probably had some fantastic brainstorming sessions and said, 'Look, we can't be successful without successful suppliers. We need to make sure that we partner with our suppliers, so that when they have state-of-the-art technologies or technological advances, they're willing to share those with us because they feel like a partner.'
It's just like a good relationship with a friend: If you don't feel like a partner, you tend to migrate where you feel like you're wanted, right? I think everybody in the industry, from a supplier standpoint, isn't just focused on GM; they supply all of the major OEMs, or they attempt to supply all of the major OEMs. Where the business relationship makes sense, it's not all 'iron fist' on their end; it's a two-way relationship. And they're doing a great job, in my opinion, in making that clear that they want to have a two-way relationship.
D2P: From Spirol's perspective, what positive outcomes do you see coming from winning this award?
MK: I think it's just a fantastic tool, in general. For a lot of the products that we supply, we're really limited on how much we can supply direct to GM, meaning GM buys the product direct from us. A lot of our products trickle down through GM's tiers. I'd say we supply, say, 25 percent of our automotive business direct to a company like GM, and the other 75 percent comes through their tiers. So, within their tier organization, when we present ourselves as a partner or a potential supplier for a product that they're looking to assemble or supply to GM, the fact that they know that we're already familiar with GM, that we have a high level of quality standard, and that we have this type of award in our back pocket—it goes a long way. They understand that you're recognized within GM as a partner, and they want to partner with companies and suppliers and partners that have high recognition within GM.
D2P: Obviously, you must have a good collaborative relationship with GM if they awarded you this award. But how would you describe Spirol's working relationship with GM?
MK: I think it's evolving. They're getting away from the 'transactional' type of business relationship, and that's good for everybody. They want to interact: You can pick up the phone and call a buyer and speak with them. You can have intelligent conversations about your ideas, you can discuss ways to reduce cost, and it's not a 'Don't bother me' type of mentality. They're really open, and they've implemented some systems that really allow the supplier who's maybe innovative, or has ideas towards the system, to not just work through a system, but work through a system that has traceability and some accountability within their organization, to get answers back to you and things like that. So, it's good. I think it's a fantastic relationship and it's only getting better, obviously.
D2P: Looking out toward the future, do you see any emerging trends in manufacturing or in the industries that you serve that are likely to impact the way that you do business or the way you operate as a manufacturer?
MK: I think, as I alluded to a little bit earlier, the mindset of the global engine, global transmission, global car, is obviously the direction that they (GM) have to take to keep their costs down and stay competitive and stay afloat. So I think we're going to see a lot more global programs, and I think from an industry standpoint, I think everybody's excited by the fact that everybody's anticipating there's going to be a 10 percent hike in North American automotive production. But everybody still proceeds with some caution, right? To us, our motto is we really don't care if it's a $10 million North American industry or a 15 million vehicle industry. Our strategy is to have more content on the vehicles that have the highest number of sales in North America. So the number of cars produced really isn't what we focus on; we focus on the content that we can get on the individual vehicles.
D2P: What would you say sets Spirol apart from other companies that you may be competing with, in terms of the services you provide?
MK: Two things, primarily. We've been in the industry for 65-plus years now. So we're not going anywhere. With us, 65 years of experience pulls a lot of merit with our customers, but in addition to that, we're probably one of 5 percent of the fastener companies that offer engineering services, or solution engineering, as we call it.
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